Building Your Custom Home in 2025: Navigating Tariff Impact and Low Rates with Confidence
You’ve probably seen the headlines about new tariffs in 2025 and wondered how they might affect building your dream home. Will construction costs spike? What about mortgage rates? At Keel Custom Homes, we understand these concerns – and we’re here to put your mind at ease. In fact, despite the noise around President Trump’s 2025 tariffs, we see plenty of reasons to stay positive about building a custom home right now. From proactive cost management to surprisingly low interest rates, let’s explore why 2025 is still a great time to move forward with your custom home project.
The 2025 Tariffs and Home Building Costs: What to Expect
In early 2025, the Trump administration announced a new round of tariffs on many imported goods, including some building materials. Tariffs act like a tax on those materials, and industry experts estimate these policies could add around $10,000 to the cost of a typical new home. That’s largely because certain construction inputs – from Canadian lumber to steel, aluminum, and appliances – might get pricier under the new import fees.
But here’s the good news: we anticipated this possibility and prepared for it. Only about 7% of the materials in an average home are imported (NAHB), so the vast majority of our building components are sourced domestically. Key suppliers like Canada and Mexico (who provide lumber and drywall essentials) have so far been spared from the newest tariffs, limiting the impact on critical materials. And for any items that do see cost increases, we’ve put proactive strategies in place to protect our clients:
Domestic Sourcing & Local Partners: We prioritize American-made and locally sourced materials whenever possible. This not only supports our community, but also sidesteps many tariff-related costs. (In fact, U.S. home builders already get most inputs domestically, reducing exposure to import fees.) If a foreign product’s price jumps, we often have a high-quality domestic alternative ready to go.
Bulk Purchasing & Price Locks: Our team has strong relationships with suppliers. We’ve been bulk-buying key materials and locking in prices ahead of time to buffer against sudden increases. For example, if we know a tariff might raise the price of windows or lumber, we’ll secure tomorrow’s inventory at yesterday’s price whenever feasible.
Streamlined Construction Schedules: We carefully plan our build schedules to avoid delays. Efficient project management means we’re ordering materials on a timeline that minimizes idle time and storage costs. By staying on top of ordering and delivery, we reduce the risk of last-minute price surges or supply snags impacting your build.
Value Engineering (Without Sacrificing Quality): Our design and construction experts are adept at value engineering – finding smart ways to achieve your desired look and performance at the best cost. If a particular imported finish becomes overly expensive, we’ll suggest creative alternatives (like a similar locally-made tile or fixture) that maintain the quality and style you expect. We're committed to preserving your vision and will always present creative alternatives if pricing becomes a factor.
Continuous Communication: Most importantly, we keep you informed. Transparency is key – if there’s a cost change or a supply issue, you’ll hear it from us with a plan of action attached. No unpleasant surprises. Our goal is to deliver your custom home on time and on budget, tariff or no tariff. And as industry observers note, builders have weathered similar challenges in the past by staying resilient and strategic. We’re doing the same, leveraging experience and determination to ensure your project stays on track.
By taking these steps, Keel Custom Homes is effectively managing the tariff situation. We’re not sitting back and hoping for the best – we’re actively working to keep costs steady and timelines predictable. The National Association of Home Builders (NAHB) is also advocating in Washington on behalf of builders and buyers, urging solutions to ease material price pressures. In short, we’re all over it. You can feel confident that while tariff news comes and goes, your custom home investment is in good hands with a builder who plans ahead.
A Silver Lining: How Mortgage Rates Remain Favorable
Here’s an interesting twist: the tariff news that raised cost concerns has actually created a silver lining for home buyers – mortgage rates have ticked down. When tariffs sparked uncertainty in the broader economy, many investors rushed into bonds (a safe haven), which pushed interest rates down. In fact, right after the tariff announcement in April, 30-year mortgage rates dipped to the mid-6% range, the lowest we’ve seen so far this year. The Mortgage Bankers Association reported rates fell from over 7% in January to as low as 6.5% by February 2025 – the “lowest levels thus far in 2025”. For buyers, that’s a welcome break. Lower financing rates mean lower monthly payments and more borrowing power for your budget.
Even industry experts acknowledge this short-term boost. “The recent dip in mortgage rates may have pushed some buyers off the fence,” noted NAHB Chairman Buddy Hughes, crediting improved rates for a surge of buyer activity in March . In other words, savvy home shoppers are seizing the moment. Purchase mortgage applications jumped significantly as rates fell, and have even been running higher than a year ago – a sign of confidence in the housing market. The spring home buying season got an extra spark thanks to these favorable rates.
“One of the oldest adages about rates is that shrewd investors buy when rates are high and sell when they are low – which is exactly the opposite of what amateurs feel to be the best practice. Low rates lead to purchasers being able to afford more, and it tends to push prices higher. So buying when rates are elevated generally means lower competition for the asset, which leads to better terms, and generally better pricing. Remember, the price you pay is fixed, but the rate at which you can finance it tends to drop over time.” – Rick Jarvis, 30+ year Realtor and Founder of One South Realty Group
We love that insight from Rick Jarvis (a veteran Richmond real estate expert and friend of Keel Custom Homes). In essence: today’s environment can benefit buyers. With rates a bit higher than the ultra-lows of 2021, there are slightly fewer buyers competing for contractors and properties – which can translate into more negotiating power and better build pricing for you. And if you secure a construction loan or mortgage now, you’re locking in your home’s price in 2025’s dollars; if interest rates drop further in the future, you can refinance to a lower rate later, but you can’t go back in time and get a lower home price if market values keep rising. As Rick reminds us, the purchase price is fixed forever, while your financing terms can always be improved down the road. This perspective is empowering: rather than viewing higher rates as a barrier, see them as an opportunity.
It’s also worth noting that many economists predict that today’s rates won’t go much higher and may gradually ease over time. NAHB’s latest forecast expects mortgage rates to trend toward 6% or below by late 2025 (albeit with some ups and downs along the way). And if the economy shows any weakness, the Federal Reserve could step in to lower interest rates to stimulate growth. So the consensus is that we’re closer to the peak than the bottom when it comes to mortgage costs. All the more reason to feel comfortable moving forward now – you’re likely catching rates on the downswing and can ride them lower in the future.
Opportunities in the Current Market
Beyond tariffs and interest rates, let’s zoom out and look at the bigger picture for custom home buyers in 2025. There are several strong tailwinds that make this an exciting time to build:
Strong Housing Demand: Demand for homes — including high-end custom homes — remains robust. Demographic trends are on our side. The largest group of 30-somethings in U.S. history is entering prime home buying years, and many of them are looking for move-up and custom homes as their families grow. Here in Virginia, we’re also seeing steady inbound migration to our region. More people want homes than there are homes available, especially in desirable neighborhoods. This built-in demand means that your finished custom home is likely to hold its value and appreciate over time.
Limited Supply = Stable Prices: On the flip side, the supply of homes is still playing catch-up. New construction has lagged behind population growth for years due to development regulations and labor shortages. Many existing homeowners are “locked in” with ultra-low interest rates from a few years ago, so they’re reluctant to sell their current homes, keeping resale inventory tight. When demand outpaces supply, prices rise, and experts expect those conditions to persist for the foreseeable future. For you, that means building a home now positions you to benefit from ongoing price appreciation. You’re essentially investing in an asset in a market that’s projected to trend upward.
Builder Confidence and Resilience: Despite some headwinds, homebuilders are feeling cautiously optimistic. In fact, builder sentiment edged up in April 2025 (after the tariff news) thanks to the helping hand of lower interest rates boosting buyer interest (NAHB). While confidence isn’t sky-high (builders are realistic about challenges like material costs), that uptick to a 40 HMI index reading indicates resilience and an expectation that sales will continue (NAHB). The industry remembers how to adapt from past experiences. Builders navigated similar uncertainties during earlier tariff rounds in 2018 and came out stronger. Moreover, NAHB is forecasting a slight increase in single-family home starts this year (and even more growth next year), which signals that the outlook remains fundamentally sound. In short, those of us in the homebuilding world are moving forward with confidence – and so can you.
A More Balanced Market for Buyers: Over the past few years, buyers often faced frenzied competition, bidding wars, and little choice. That’s changing. With mortgage rates off historic lows, housing demand has normalized a bit and inventory is gradually improving. Nationally, the number of new listings is up double-digits from a year ago, and we’re seeing a bit more breathing room for buyers to make decisions (especially at the higher end of the market). This more balanced environment means when you build a custom home now, you’re less likely to run into the extreme delays or contractor shortages that plagued the peak of the boom. You have the chance to work closely with us, on your timeline, and get exactly what you want without feeling rushed or squeezed by marketplace chaos. It’s a buyer’s market for those building a home, and we’re able to give you our full attention and expertise.
All of these factors combine to create a truly favorable scenario for our Richmond, VA clients. You can move ahead knowing the market supports your decision. Your custom home will be born into an environment of high demand, limited competition for quality builds, and a confident, resilient building industry.
Tariff Custom Home Frequently Asked Questions (FAQ)
Q: Will the 2025 tariffs significantly increase the cost of building my custom home?
A: Not necessarily. While tariffs may affect certain imported materials, Keel Custom Homes has put strategies in place—such as pre-purchasing materials and sourcing domestically—to manage and minimize cost increases.
Q: Are mortgage rates still high?
A: Mortgage rates have actually dipped since the 2025 tariffs were announced, with 30-year fixed rates falling to the mid-6% range—among the lowest levels this year. This presents an opportunity for improved affordability.
Q: Is now a good time to start building a home?
A: Yes. With lower mortgage rates, strong housing demand, and more flexibility in the construction schedule, 2025 remains a smart time to begin your custom home project.
Q: How can I protect my budget when building a custom home during economic uncertainty?
A: Keel Custom Homes offers price strategies, alternative material options, and full transparency about market conditions. Our team is dedicated to helping you build with confidence and clarity.
Q: Will tariffs affect my home's timeline?
A: We closely monitor our supply chains and plan proactively. Most projects continue without delays thanks to our early procurement and strong supplier relationships.
Ready to Build? Let’s Talk!
At Keel Custom Homes, we are energized by the opportunities we see in 2025. Yes, tariffs and interest rates are in the news – but as we’ve outlined, we have a plan for the costs, and the benefits (like low mortgage rates and strong home values) far outweigh the risks. The path forward is clearer than the headlines suggest, and our team is here to guide you every step of the way with optimism and expertise.
If you’ve been considering a custom home, don’t let the headlines hold you back. Now is a fantastic time to get started, and you’ll thank yourself later for being ahead of the curve. Whether you want to discuss how we’ll tailor your home’s design, how we handle budgeting in this climate, or what financing options could work best for you, we’re here to help.
Take the first step toward making your dream home a reality – schedule a consultation with us today! Let’s chat about your vision, answer all your questions, and set a plan in motion. With Keel Custom Homes by your side, you can feel confident that your new home will be everything you imagined and more, built on a foundation of smart planning, quality craftsmanship, and a positive outlook. We can’t wait to partner with you and create something beautiful together. Contact us now to get started on the home you’ve always wanted!
Sources:
National Association of Home Builders – Housing Market Index Survey, April 2025
RealEstateNews – Mortgage rate roller coaster after tariffs realestatenews.com
Mortgage Bankers Association – Mortgage rate trends and application datatime.comrealestatenews.com
NAHB Chairman Buddy Hughes – On impacts of tariff and rates nahb.org
Rick Jarvis – Why Buy Now? (Real Estate Insights)
NAHB/Small Business Growth Partners – Industry adapts to tariff challenges smallbusinessgrowthpartners.com
NAHB Forecast – Outlook for housing starts and rates fcnews.net
Keel Custom Homes Blog – Richmond housing demand and supply trends